The present study examines factor content of the CEE transition countryagricultural trade. We examine the relative country abundance for labour,capital and land, and test the Heckscher-Ohlin-Vanek (HOV) hypothesis. Ourempirical findings suggest that the factor content of agricultural exports andimports is rather similar in CEE and most of the agricultural trade flows donot satisfy the HOV prediction. In order to explain the general lack of agricultural specialisation and the observed paradox in the CEE's agricultural trade,we examine the role of transaction costs and market imperfections. We findthat transaction costs and market imperfections distort farm specialisation andhence factor content of agricultural trade.